Friday :: Dec 21, 2007

The Corrupt Clinton Foundation

by eriposte

Yesterday, Don Van Natta et al. published a long, almost substance-free and blatant hit piece in the New York Times on the Clintons focusing on the Clinton Foundation and the topic of conflict of interest and possible influence peddling by Clinton Foundation donors. It predictably got stenographed into a Recommend Diary at Daily Kos, whose author claimed:

The article is long, even by New York Times standards. And it documents case after case of deals which would become powerful fodder for Republicans should Hillary win the nomination.

Well, we can be certain that there is nothing that will not be fodder for Republicans but some fodder is real and some is fake. Unlike the real fodder about Sen. Obama's "present" votes, this one on the Clintons happens to be of the fake variety, as is usually the case with New York Times stories about the Clintons since the 1990s.

Before I comment on the specifics of the story, let me state a couple of things. I support having complete transparency when it comes to donors to Presidential libraries or foundations. However, to be fair to people who do donate, it does not make sense to make this retroactive, simply because many people donate (to various causes) under the assumption of anonymity. So, it makes sense to set new ground rules going forward.

The NYT story itself tries to use examples of various firms or characters who donated to the Clinton Foundation (or library) to try and insinuate that there was some kind of unethical or illegal quid pro quo involved, without actually providing any evidence of any quid pro quo. What is perhaps the most revealing part of the article though is how, if you read the fine-print of the article very carefully, you will see that it repeatedly exonerates the Clintons from the very insinuations in the article.

Let's start here:

Some of [Sen. Clinton's] rivals argue that donors [to President Clinton's Foundation] could use presidential foundations to circumvent campaign finance laws intended to limit political influence.

However, the article also mentions this:

Mr. Clinton himself echoed those concerns this fall when he pledged to make public future donors if Mrs. Clinton was elected president. While disclosure is not legally required, failure to do so, Mr. Clinton said, would raise “all these questions about whether people would try to win favor with her by giving money to me.”

Even so, past donors should remain private, he insisted, “unless there is some conflict of which I am aware, and there is not.”

As is typical with these hit-pieces, van Natta et al. conveniently cropped Clinton's full quote:

The article continued: "While disclosure is not legally required, failure to do so, Mr. Clinton said, would raise 'all these questions about whether people would try to win favor with her by giving money to me.' " But the article omitted the rest of Clinton's statement, in which he asserted, "You know it wouldn't work, and I don't think they would. Still, there are legitimate questions."

Further, you have to get to the 43rd, I'm not kidding, 43rd paragraph of the story to discover that:

[In 2000] spring, Mrs. Clinton co-sponsored legislation to publicly identify donors to foundations of future sitting presidents. She referred to that legislation in the debate three months ago, although the bill had died in committee.

The legislation may have died in committee due to the Republican control of the Senate then, but the very fact that Sen. Clinton has supported making it a legal requirement for Presidential Foundations to be transparent about their donors indicates that she and her husband, President Clinton, must have taken significant precautions to ensure that President Clinton's foundation was always within the bounds of the law and that her campaign was always within the bounds of the law. After all, there was no way for her to reasonably predict when such transparency might be mandated and there was also every reason for her and President Clinton to be aware that given how the Press hounded them during the 1990s, mostly without justification, on every penny they received, everything they did would likely be viewed with a 1000X magnifying glass compared to anyone else running for public office. In fact, as the article also notes at the very end:

As the presidential campaign got under way, foundation officials began working to ensure that none of their enterprises would have political repercussions for Mrs. Clinton. Brian Byrd, who once worked for the Rockefeller Foundation and is now a lobbyist for arts groups, said that this year he interviewed for a job created to help review attendees to Mr. Clinton’s annual conference and make sure charitable pledges were met.

“Part of it was that Hillary was running for president, and they wanted to be sure everything was on the up and up — that was said to me,” said Mr. Byrd, who added that he decided he did not want and was not offered the position. “They wanted to get all their ducks in a row.”

Despite all of this, the article is written with the usual mix of fake intrigue usually reserved for the New York Times' treatments of the Clintons and Al Gore. Indeed, there is nothing significant in the article that suggests any kind of wrongdoing on the part of the Clintons. Further, the article even exonerates the Clintons in more than one case, although they never make this explicit and the narrative is deliberately misleading such that anyone other than careful readers can't quite figure out what to make of the claims. It is exactly this kind of crap that was behind the fake Whitewater "scandal" largely originated by van Natta's fraudulent colleague Jeff Gerth at the NYT.

To see why this article is a hit piece, let's use some of the prominent examples discussed in the piece.

1. Anheuser-Busch

The article says:

On October 6, 1999, the charitable arm of the Anheuser-Busch Companies gave $200,000, the first of five payments over five years totaling $1 million, according to records filed by the company’s foundation. Less than a month earlier, the company, the country’s leading beer maker, had scored a major victory when the Clinton administration’s Federal Trade Commission dropped a bid to regulate beer, wine and liquor advertising that critics said was aimed at under-age drinkers.

Francine I. Katz, a company spokeswoman, said the donation was unrelated to any government action and that its foundation had contributed more than $360 million to a wide array of organizations, including the Bush, Truman and Johnson presidential libraries.

First, note that there is no evidence that Anheuser-Busch actually pledged any money in return for a favorable FTC decision. Second, the NYT article misleadingly claims that the FTC "dropped a bid" to regulate alcohol companies. The reality was different, if you simply read the Sep 1999 FTC report:

This report responds to a recent request from the Congressional Committees on Appropriations that the FTC examine the effectiveness of the alcohol industry's voluntary guidelines for advertising and marketing to underage audiences. The report provides company-specific information, supplied in response to orders by the Commission, only in an aggregate or anonymous fashion.

In other words, Congress did not ask the FTC to regulate alcohol advertizing and the FTC did not "drop that bid". So, this is classic anti-Clinton New York Times. The FTC in fact said:

While the current codes provide important protections, improvements are needed both in code standards and implementation to ensure that the goals of the industry codes are met. The Commission recommends the following:
[blah blah blah]

2. Loral Space and Communications

The article says:

Bernard L. Schwartz, another major Democratic contributor who was then chief executive of Loral Space and Communications, gave $250,000 and pledged $750,000 more in 2000. At the time, investigators were trying to determine if Loral had improperly provided satellite technology to China. Under the Bush administration, Loral agreed to pay a civil fine of $14 million to settle the case. Mr. Schwartz, who is now also a Hillraiser, said that his donations were unconnected to Loral’s troubles and added that he had contributed to other presidential libraries.

In other words, the Clinton administration actually never dropped their investigation and the investigation continued beyond 2000 into the regime of the Bush administration! So, another highly misleading formulation from van Natta et al. which reminds me of the breathless claim that Mark Penn began working for the Clintons when Microsoft was one of Penn's biggest clients and when Microsoft was facing a massive antitrust lawsuit from the Clinton Justice Department. As we all know, the Clinton administration took Microsoft to the cleaners, regardless.

3. Puerto Rico Hospitals

The article says:

Toward the end of the Clinton administration, Dr. Richard Machado Gonzalez and his lawyer, Miguel D. Lausell, both major Democratic donors in the 1996 presidential election, were pushing the president to increase Medicare reimbursements to hospitals in Puerto Rico, like the one owned by Dr. Machado. Mr. Lausell pledged $1 million to the library in 1999, eight months before Mr. Clinton proposed increasing Medicare payments to Puerto Rico for the second time in his administration. Dr. Machado gave the foundation $100,000 about six months later.

In the interim, the president appointed Mr. Lausell to the board of the Overseas Private Investment Corporation, which helps American companies with foreign projects.

Jeffrey Farrow, who coordinated issues involving Puerto Rico for the president, said the administration felt Medicare unfairly penalized Puerto Rico by paying a lower rate there than in the 50 states. Although Congress rejected the proposed increase, Mr. Farrow said “they didn’t have to contribute the way they did in order to get our attention."

This is another extraordinarily misleading formulation thrown into the mix by van Natta et al. just to make the Clintons look bad. In fact, you can tell there is a serious problem with this thinly veiled accusation if you notice the phrase "before Mr. Clinton proposed increasing Medicare payments to Puerto Rico for the second time". Unless you paid attention, you probably wouldn't notice that the first time was well before any pledge or donation was made to the Foundation! What is equally problematic is that they throw in Jeffrey Farrow's comment in a manner that makes it seem like it was just a matter of personal opinion that Medicare reimbursements for Puerto Rico were lower. All it takes is a 10 second Google search to show how incredibly misleading this whole claim is - for example here is an Oct 2002 article from the Puerto Rico Herald:

The Democratic and Republican leaders of the Senate Finance Committee this week sponsored a bill that would close half of the gap between the treatment of Puerto Rico hospitals and the treatment of hospitals in the rest of the country under the program funding health care for the aged.

The legislation would change the formula for Medicare payments for in-patient hospital services in Puerto Rico from 50% of the rates for services that apply elsewhere and 50% based on Puerto Rico cost factors to 75% of the national rates and 25% local cost factors. The change could increase the payments some $30 million a year, with the amount increasing as costs rise.

The bill by Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Republican Charles Grassley (R-IA) revived a proposal made in 2000 by then President Bill Clinton.

The proposal won broad bipartisan acceptance in 2000. Lobbying by then Puerto Rico Governor Pedro Rossello (statehood party/D), Resident Commissioner Carlos Romero Barcelo (statehood party/D) and the Puerto Rico Hospital Association won endorsements from Senator Rick Santorum (R-PA) and Republican leaders of the House of Representatives as well as support from key Democrats.

The proposal was blocked, however, by then Senate Majority Leader Trent Lott (R-MS), who worked -- and continues to work -- closely with now Puerto Rico Governor Sila Calderon ("commonwealth" party/no national party).

Baucus and Grassley included the proposal in a compromise measure intended to break a multi-year deadlock between Democrats and Republicans in Congress on Medicare reforms. The deadlock is primarily attributable to differences over Medicare prescription drug benefits that arose when Clinton proposed the Medicare reform in 2000.

The Puerto Rico proposal was included the Baucus-Grassley bill because it has continued to be considered one of the needed Medicare reforms and because of lobbying by the Puerto Rico Hospital Association. In fact, Baucus and Grassley made the proposal acted after Calderon’s Resident Commissioner in Washington, Anibal Acevedo Vila ("commonwealth" party/D) gave up hope of further progress on the issue this year.

Acevedo had pressed for the proposal in the House but had less success.

Largely due to the efforts of House Ways and means Committee Ranking Democrat Charles Rangel (NY), a House bill would increase the Puerto Rico hospital services formula to 75% of the national rate and 25% local cost factors but phase in the increase over five years beginning with the fiscal year that starts October 1, 2003. The Baucus-Grassley bill would change the formula effective the fiscal year that began this week.

Prompted by the Puerto Rico Hospital Association and Romero, Clinton successfully proposed changing the formula from 75% Puerto Rico cost factors and 25% national rates in 1997 to the current 50/50 formula. The Clinton Administration also changed the method of calculating the Puerto Rico cost factors. Each change increased payments in Puerto Rico about $22 million a year, with the amounts increased for inflation.

The Baucus-Grassley bill would also increase Puerto Rico funding under the program funding health care for the needy. The measure would increase the cap on Medicaid funding in Puerto Rico 2.6%, almost $4.6 million this fiscal year. It would also increase Medicaid funding in some other areas of the country.

Puerto Rico’s Medicaid funding is only about one-sixth of what it would be if the territory was a State. The amount, which is changed yearly for inflation is about $192 million currently.

The 1997 bill which changed Puerto Rico’s Medicare hospital payments formula also included a Clinton proposal substantially increasing the cap on Medicaid funding in Puerto Rico. The increase was $30 million, adjusted for inflation. With inflationary increases, it is responsible for about a quarter of the Medicaid funding Puerto Rico is receiving just six years later. Former Resident Commissioner Romero is also due much of the credit for the 1997 Medicaid increase.

In other words, Puerto Rico hospitals were indeed being underpaid compared to hospitals elsewhere in the country and Clinton first introduced a measure in 1997 (well before he even formed his Foundation or got any pledges from Puerto Ricans) to address this - both from a Medicare and Medicaid perspective. He continued to push for reducing the gap between Puerto Rico and the rest of the US in subsequent years - and his proposal had broad bipartisan appeal. You'll find out none of this if you read the NYT hit piece.

4. NextWave Wireless

The article continues:

A fledgling telecommunications company, NextWave Wireless, was battling the Federal Communications Commission when library fund-raisers tapped its chief executive and a major investor. NextWave had promised to pay $4.74 billion for cellphone licenses, but when it declared bankruptcy before completing its payments, the F.C.C. threatened to put the licenses up for public auction, which would have ruined NextWave.

Over three consecutive days in December 1999, with a decision imminent, the library logged a $100,000 pledge from NextWave’s chief executive, Allen Salmasi, and a $100,000 contribution plus a $1 million pledge from Bay Harbour Management, a major investor in NextWave.

The agency ultimately repossessed NextWave’s licenses, prompting a court battle that the company won. Bay Harbour’s co-owner, Douglas Teitelbaum, who declined to comment, never fulfilled his promise to contribute the additional $1 million. Mr. Salmasi did not respond to an e-mail message or to calls to a company spokesman.

If you read carefully you would have noticed that despite any pledges from NextWave management to the Clinton library, the FCC went ahead anyway and repossessed NextWave's licenses! This is what I mean when I say this is a hit piece. Example after example cited only proves - based on careful reading - that Clinton was thoroughly above board in making sure that Governmental goals were never compromised based on personal donations, unlike what we have seen repeatedly with the Bush administration. In fact, van Natta et al. don't bother to point out something else that this article from 2004 points out - that the FCC even continued its fight against NextWave for 4 years after the Clintons had left the White House!

NextWave Telecom Inc. and the Federal Communications Commission have finally settled an eight-year battle over the highly contested and valuable wireless spectrum.

Under the terms of the resolution, NextWave will return some of its licenses to the FCC, which will then auction them to other wireless carriers. Some industry observers expect that NextWave eventually will sell the remainder of its licenses to other carriers.

In February 2003, the U.S. Supreme Court ruled that, contrary to the FCC's stance, NextWave rightfully held the spectrum despite having defaulted on payments to the government. But because of complicated license-transfer rules, NextWave was unable to use its licenses freely until it reached this week's agreement with the FCC.

The article also uses examples of one or two unsavory donors to paint the Clintons in poor light but this is typical of hit pieces because if we started looking into the backgrounds of every donor that donates to politicians you will always find some that are unsavory. It's no surprise given what we know about some previous reporting of van Natta (emphasis in original):

On the July 6 edition of the Public Broadcasting Service's (PBS) Charlie Rose Show, authors Jeff Gerth and Don Van Natta Jr. repeated their defense of the disputed claim in their book Her Way: The Hopes and Ambitions of Hillary Rodham Clinton (Little, Brown & Co., June 2007) that after President Bill Clinton took office in 1993, he and Hillary Clinton updated their alleged "twenty-year project" to include "eight years as president for him, then eight years for her." When host Charlie Rose noted that the purported source of the story, historian Taylor Branch, "has denied it," both Gerth and Van Natta suggested that Branch originally told them that he "didn't remember" relaying this story to a married couple (whose secondhand account the authors cite in the book) "at a barbecue in Aspen, Colorado, in the summer of 1993." Gerth and Van Natta also claimed that Branch "wouldn'tdeny it happened" when they spoke to him during the writing of the book. However, as Media Matters for America noted, Branch claimed in a May 31 written statement that the authors "never told" him what he was "supposed to have said" to the couple and that what he "didn't deny" was dining with the couple in Aspen in 1993. Branch asserted that it was not until receiving advanced "proofs" of Her Way that he became aware of the substance of "a story attributed to me therein from the summer of 1993" and further stated he had "never heard either Clinton talk about a 'plan' for them both to become president."


In fact, Branch has claimed that what he denied remembering was "that I saw Ann Crittenden and John Henry in Aspen years ago," not the contents of the conversation. Indeed, according to Branch, "Mr. Gerth never told me what I am supposed to have said in the summer of 1993," therefore "[i]t is disingenuous for him to imply that I am 'not denying' the substance of his story." Following is Branch's full statement:

On May 24, 2007, I received by email copies of pages 128, 129, and 372 from the book Her Way, by Jeff Gerth, along with press inquiries about a story attributed to me therein from the summer of 1993.

The story is preposterous in several respects. First, I never heard either Clinton talk about a "plan" for them both to become president. Late in his second term, she and I did have a few glancing conversations about whether she might run for the Senate.

Second, my "diary sessions" with President Clinton did not begin until October of 1993. Before that, I did not see him for the twenty years between 1972 and the end of 1992. We began to get reacquainted in a handful of encounters during 1993, mostly in large groups. He was not disclosing long-term family ambitions to me then, and he never subsequently mentioned anything remotely like those described here.

Third, Mr. Gerth never told me what I am supposed to have said in the summer of 1993. I learned that only last week from the proofs of his book. It is disingenuous for him to imply that I am "not denying" the substance of his story. What I didn't deny is that I saw Ann Crittenden and John Henry in Aspen years ago. When Mr. Gerth called, I declined his request for an interview and asked him not to start discussing Clinton stories with me on the telephone. He was kind enough to comply.

This is a very small episode in fact, but fiction can readily impugn motives. Reporters who wish to clarify details on my role may contact me here in Baltimore.

So, yet another misleading hit piece on the Clintons by unreliable reporters gets prominent coverage in the NYT. What's new is that some alleged progressives have become their stenographers.

eriposte :: 6:14 AM :: Comments (5) :: Digg It!